Case Law Summaries

Borough of Lodi v. Lodi Lumber & Supply Co., Inc.

CONDEMNATION; REDEVELOPMENT — The requirement that a condemning authority engage in bona fide negotiations met when the authority sends a written offer listing the property and the compensation to be paid, and by including a copy of its appraisal report with details of the appraiser’s methodology for calculating fair market value.

A municipality authorized its planning board to investigate whether part of a downtown area was in need of development. The board found it to be so, and by resolution stated that the buildings in the area, previously used for commercial, manufacturing or industrial purposes, were sub-standard, unsafe, dilapidated, and obsolete. The municipality adopted a redevelopment plan. Then, it sought to condemn a particular property owned by a lumber company. It notified the company and submitted an offer to buy the property at a value set by the municipality’s appraiser. The offer included an offset for costs to remediate contamination. After receiving no response, the municipality advised the company that it would proceed to file a condemnation action. The company responded with a price demand that the municipality considered too high to enable meaningful negotiations. It then filed the condemnation action. The company defended, claiming that the property was not within the redevelopment area and that the municipality did not engage in bona fide negotiations.

The lower court held that a condemning authority has an overriding obligation to deal forthrightly and fairly with property owners and must attempt to engage in “bona fide negotiations” before resorting to condemnation. It can make a single offer for not less than the agency’s approved fair market value appraisal. If the owner rejects the offer or fails to accept it within fourteen days of mailing, the condemning authority may commence its condemnation action. In that action, a property owner may contest a blight designation as a defense. That is, it may challenge a determination that its property is in need of redevelopment.

Here, the lower court found that the requirements for bona fide negotiations were met when the municipality sent a written offer listing the property and the compensation to be paid, and by including a copy of an appraisal report with details of the appraiser’s methodology for calculating fair market value. The Court also noted that the property owner failed to respond to the purchase offer until more than a month after it was sent. It also found that the property owner failed to present evidence to suggest that creation of the redevelopment district was improper or that the taking was invalid. Thus, the Court concluded that the municipality had the authority to acquire the property by condemnation and it appointed commissioners to fix compensation.